San Diego County Real Estate Market Rebounds; California Mortgage Applicants Absorb Inventory
San Diego County’s home price slide reversed course last month and brought the median up $9,000 from September to $485,000, the San Diego Union-Tribune reports.
September’s overall median of $476,000 was the lowest since February 2005, making October’s turnaround a welcome sign to sellers tired of cutting prices and waiting for cautious buyers to make an offer.
“Buyers can only stand on the sidelines so long when the mortgage rates are 6.25-6.50 percent,” said Charles Jolly, president of the San Diego Association of Realtors. “There’s been enough information in the media indicating that buyers can negotiate and prices have softened.”
Jolly said a lower inventory of homes currently for sale indicates that sales are making a dent in the California housing market backlog.
“It’s just taking a little longer,” he said.
While the inventory of unsold active listings was 35.9 percent higher than a year ago, standing at 20,416 homes, it was the smallest increase since July 2004. The largest inventory of homes in eight years of record keeping was 22,990, recorded in August. It took 71 days to sell a detached home last month and 72 days to sell an attached home, compared with 56 and 59, respectively, in October 2005.
But real estate agents, mortgage brokers, lenders and all the other players in the housing industry shouldn’t uncork the champagne and toast rising prices and commissions just yet.
Ross Starr, a University of California-San Diego economist who watches the local housing market closely, said a “bi-coastal housing recession” has developed in previously hot markets.
That list includes Southern California, South Florida and Las Vegas. He cited sagging home builder stocks, construction cutbacks affecting employment and lower new-home prices, although the new home median here last month increased from September.
“The bubble’s burst. There’s a big difference between that and recession, but real estate is a big piece of investment and it’s investment that drives changes in gross domestic product. So the conventional view is the U.S. economy will continue to grow but will grow real slowly because the housing sector is contracting,” he said.
For San Diego County, Starr said the year-over-year pricing trends confirm his thoughts about a localized housing recession. The October median was 5.5 percent lower than a year ago – the fifth straight month of year-over-year declines – and represented the biggest such reduction since December 1996, about the time things starting picking up after a six-year downturn.
While California mortgage loans are among the nation’s priciest, last month’s drop in home prices offers buyers some relief. The median price of single-family homes, representing half of the market, fell $10,000 in October. The $535,000 median fell $34,500, or 6.1 percent, from its all-time high of $569,500 set in May and is back to where it stood in March last year.
Put another way, if you own the typical house and want to put it on the market, price it at what it sold for a year and a half ago, not last month.
The high end is still doing well, but the thinking is the sales counts in the upper move-up part of the market are coming down. A lack of presence in those statistics would mean mid-market and lower-cost, entry-level markets are having a greater influence on the median price and will drag it down a bit.
That’s good news for would-be purchasers waiting on the sidelines in hopes of shifting conditions. Due in large part to how expensive California mortgage costs have gotten, almost no one is going through with a purchase without having sold their previous home, agents say.
On the sales side, there were 3,282 transactions last month, up 2.3 percent from September, a typical seasonal uptick, but still down 21 percent from a year ago, the 28th straight month of year-over-year sales declines. It was the lowest year-over-year decline since May’s 18 percent drop, however.
Below is a San Diego Union-Tribune graphic detailing how rapidly sales prices in certain counties have escalated. As you can see, California mortgages in this part of the state are pricey.
